UPS Innovates through Mobility

By Lori Castle, Editor in Chief — July 08, 2014

On top of the usual, "keeping the lights on," IT leaders are met with a growing demand for mobile connectivity, apps for employees, customers and consumers, data for insight and for analysis. To some, the rising pile of projects might be a burden, but not for Juan Perez, VP of Information Services, UPS.

For him, mobile is just another word for opportunity and he is eager to help identify and implement the solutions that accelerate innovation. "It’s good news for us, as a majority of the projects we are engaged in are high-impact projects across the organization," he said.

The company has transformed from being a simple package delivery company, to a provider of global logistics services—a result of continued enhancements to its products, services, infrastructure and technology.

"Our message that 'we love logistics,' encapsulates what we are really about—that is providing logistics solutions to our clients that can help them grow their own businesses. In fact, we believe our solutions can help our customers do more for their own customers, and therefore enable additional business opportunities for them," he explained.

Mind-Boggling Numbers
While the logistics side of the business may be handling freight or creating supply chain efficiencies, UPS, of course still delivers a lot of packages to nearly every street in the U.S. (at least once) and beyond—16.9 million packages to be exact. And the company is collecting information on each and every package it’s delivering.

Over 100,000 drivers are using the fifth-generation Delivery Information Acquisition Device (DIAD). The company processes nearly 50 million tracking requests per business day, and, using 250 million address data points, its On-Road Integrated Optimization and Navigation (ORION) system—a proprietary routing software that uses package-level detail and customized online map data to provide drivers with optimized routing information)—evaluates more than 200,000 alternative ways to run a single route. Processing this algorithm equates to 1,000 pages of code.

That’s a lot of data—and a lot of technology—but there’s a $1 billion budget behind it. "The organization is truly committed to technology. We know and recognize wholeheartedly, that for us to be competitive in this market, and for us to continue to provide solutions and services to our customers, we need to ensure that we have the right technologies," says Perez.

Mobile From the Beginning
While mobile technology has advanced and the use cases have changed with business demands, Perez points to a seminal moment for the company; where the vision began. "A very important milestone in our history, from a technology standpoint, was the introduction of the DIAD back in 1990-1991."

The development of this proprietary device certainly marked a significant shift in the way UPS managed its business—it was the start of automation, paper reduction, higher productivity, etc. But equally as important, the company started recognizing the possibility of connecting its customers to UPS through mobility.

"Although we were at the infancy of what mobile technology was going to look like for UPS, I think it really opened our eyes as a management team, to all the things that this type of technology could enable—not only internal to UPS, but also for our customers and the industry in general," says Perez.

Remarkably, even at that time, the company realized how important data would be to the future of its business. According to Perez, the moment they decided to invest in technology and started seeing how the information coming in could provide insight, was the moment they knew it could transform UPS' business and its customers’ businesses. Data was, and still is, the catalyst to new and better services.

Business & IT
Technology has remained at the core of the company, and decisions around technology are made based on what is best for the business. It’s not the other way around, like in many other organizations. Perez says, "We have a very close working relationship with our business partners, across all aspects of the business—not only in operations but also in marketing, business development and customer relationship management. And those relationships have really enabled us to make good decisions when it comes to investing in technology."

Not only does IT have a seat at the table, the team itself is made up of "a good combination of very strong technologists, but also people who have very good business sense." Both Perez and CIO David Barnes came up through the ranks, starting as drivers. So they literally know the ins and outs of the business.

Barnes also worked in operations and went through a number of different rotations that gave him a sense of business processes across the company. "Then, with his technical know-how, he was able to bridge those two and give us a great direction for where we wanted to take technology in this company," explains Perez.

90s to Now
As a driver, Perez used the very first version of the DIAD—it was the size of a clipboard. At the time, it was a custom developed device, as there were no commercial options on the market that could meet the company’s needs.

Now, the company is running the fifth generation solution, and the device itself has become generally available. Actually, UPS had influenced the change in the hardware over the years, much to its advantage.

Of course having a device on the market that competitors use could also be a disadvantage. But as Perez points out, "What matters most is not so much the hardware itself, which is becoming common place in the market, but what’s in the device; it’s how we use it that matters."

He calls it a very powerful device with incredible capabilities; most would say state of the art. The DIAD V is about half the size and weight of the previous model, and is the first to feature technology which allows it to automatically switch wireless carrier networks in the field—without service disruption—quite a technological (and service) breakthrough.

Package and service data flows through DIAD V, which also has a GPS unit in it. "Every time we make a delivery, we connect the service point. We know who signed for the package and who that package is actually for [if it’s not the same person] and where it was left or was delivered," Perez explains. These many data points around one package—times nearly 17 million packages a day—are all aggregated into UPS' databases.

As data is only as good if it can be processed, hardware is only good when it is running, and DIAD V has a failure rate of less than 5%. With all this functionality, how long will this gen be in play?

UPS has a philosophy of innovation, which means they are already thinking of the DIAD VI. They know that the next generation of devices will provide even more capabilities. "It will support our business in ways that we know today, and in ways we haven’t thought of yet," according to Perez. Driving improvement in the DIAD ensures that UPS’ customers get the benefits from the technology as well.

Mobile Data
What enables innovation is insight, and Perez emphasizes how important the connection is between the mobile data gathered, to truly improving the way the business is run and how it provides services. "At the end of the day, data doesn’t really mean much if you can’t make it tangible for the consumer/customer," he says.

Big data at UPS has evolved with the technology and vision it empowers. Perez says they began by looking at basic data around daily trends—"what happened yesterday?" But by continuing to aggregate more and different types of information through the advancement of the mobile solutions, he notes, "We have gone from simply understanding what happened yesterday, to now understanding how we should be changing our business tomorrow to run it more effectively."

This is, in part, how ORION came to be and it's been rolled out to approximately 15,000 drivers already. The ORION systems takes operations data, historical delivery information collected via the DIAD V, along with customer information to form a complete view of the business—even before the packages actually show up.

Imagine when Perez started, all routes were calculated manually. Now, through the latest technology all the routes are optimized. This may seem obvious in today’s world or even somewhat insignificant, but here’s the big picture that comes from big data.

If UPS saves just one mile across every driver in the course of a year, that’s equivalent to about $50 million in savings. On top of that, in 2013, ORION resulted in reductions of more than 1.5 million gallons of fuel and 14,000 metric tonnes of CO2 emissions.

Once fully rolled out (45% to be completed by the end of 2014), ORION will calculate 10s of thousands of route optimizations per-minute based on real-time information. "Here is a very tangible connection between mobile technology and true improvement in our business processes," says Perez.

UPS founder Jim Casey believed that companies and people should always seek improvement. That legacy is seen in a long-standing culture of "constructive dissatisfaction," and seen here in the continued committment to investing in technology for innovation.

MY CHOICE

Mobile technology has enabled UPS to offer more and better services to its customers. One example is the My Choice program. Never before have consumers been able to exercise so much control over their deliveries.

At UPS, all the packages bound for a particular address come together on the same truck, regardless of whether they were shipped by ground or air. There’s not one truck for air, another for ground and yet another for residential deliveries.

Through subscribing (for free) to the My Choice program, consumers can narrow and select delivery time frames, reschedule or reroute packages, authorize others to sign for packages, provide personal instructions to UPS drivers and have packages delivered to alternate locations or held while on vacation.

There is also a premium service level that provides an even narrower window for a delivery, guaranteed.

In other words, "You now can control your own personal ‘supply chain," says Juan Perez VP of Information Services, UPS.

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